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Question
A purchase of U.S. government securities by the Fed causes
A) a multiple contraction of the money supply because deposits fall by more than the amount of the securities purchased.
B) a contraction of the money supply equal to the amount of the securities because all other transactions occur within the banking system.
C) a multiple expansion of the money supply because the reserve ratio is less than one.
D) an expansion of the money supply equal to the amount of the securities because all other transactions occur within the banking system.
Answer
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Related questions
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